A full deal write-up will be forthcoming, with detailed inventory analysis and valuation. This short note represents our initial reaction to the deal.
Before the market open on Wednesday, February 18th, SM Energy (SM) announced it had agreed to sell its gassier Galvan Ranch position in the Eagle Ford to Caturus Energy – the rebranded Kimmeridge Texas Gas. – for $950 million in cash. The assets consist of ~61,000 net acres in Webb County and ~250 MMcfe/d of net production (~10% oil, 50% gas, 40% NGL) from 260 producing wells as of December 2025. The sale is expected to close in the second quarter of 2026 with an effective date of February 1, 2026.
SM closed its merger with Civitas on January 30th and disclosed a divestiture target of $1 billion to aid in deleveraging its balance sheet and streamlining its portfolio. The first deal out of the gate nearly achieves that target. The combined SM-CIVI is a five-basin company spanning the Midland, Delaware, Eagle Ford, Uinta, and DJ, and two of the key questions around the deal were the increased leverage brought by Civitas, and the scattered asset base.
Left: SM’s Eagle Ford acreage position, up-dip oily acreage retained (red) and down-dip gassy acreage sold (blue)
Right: Horizontal PDP wells in the western Eagle Ford, select operators only
Source: Novi Insights, Novi Intelligence
This deal does not exit SM from the Eagle Ford. SM retains the up-dip oilier portion of its Eagle Ford position, and just over half of its Eagle Ford production on an oil equivalent basis (from Q3 2025 disclosures). The deal leaves SM around 40% oil, 70% liquids, and ~45 Mboe/d pro forma in the Eagle Ford.
For Caturus, the deal builds on the former Kimmeridge Texas Gas (KTG) platform that began with 2022’s Webb County dry gas acquisition of Laredo Energy. In the subsequent years, Kimmeridge engaged in an activist campaign with SilverBow Resources (SBOW), which initially proposed combining KTG with SBOW to form a large Eagle Ford pure-play. Kimmeridge later dropped the ask to combine assets, and SBOW eventually sold to Crescent Energy in 2024. After additional bolt-on deals in the Eagle Ford, in December 2025 Caturus announced entry into the Haynesville through a development agreement with Blackstone Minerals, whereby Caturus would commit to a ramping number of wells per year, supported by minimum annual lateral-foot requirements.
Caturus states that this deal takes them to ~275,000 net acres and ~950 MMcfe/d net production in total. The Caturus Energy platform also includes Commonwealth LNG – a six train, 9.5 MTPA (~1.26 Bcf/d) capacity LNG export terminal on the Louisiana coast. Commonwealth LNG is awaiting FID. In 2023, Kimmeridge announced a transportation agreement with Kinder Morgan to move its Eagle Ford gas to the gulf coast pipeline network that provides access to LNG export terminals.
The Eagle Ford recently saw the Stone Ridge / Flywheel team take down Baytex’s position as it retreated to Canada, and ExxonMobil also has an active process to sell its position in the play. While Devon has not yet guided to which assets will be on the chopping block once it closes its pending merger with Coterra, we would not be surprised if the Eagle Ford is one of the positions put up for sale.
On February 18th, the date of announcement, SM stock was up 7.93% compared to the XOP up 1.82%, a single-day outperformance of >600 basis points.
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A comprehensive Deal Insight with detailed inventory modeling and valuation will be published shortly. This short note represents our initial reaction to the deal. https://intelligence.novilabs.com/login/
Key Takeaways
- SM Energy agreed to sell its Galvan Ranch Eagle Ford position to Caturus Energy for $950 million in cash.
- The divested assets include ~61,000 net acres in Webb County and ~250 MMcfe/d net production from 260 producing wells as of December 2025.
- The sold production mix is ~10% oil, 50% gas, and 40% NGL, with an effective date of February 1, 2026.
- The sale is expected to close in the second quarter of 2026 and nearly meets SM’s $1 billion divestiture target disclosed after the Civitas merger.
- SM retains the up-dip oilier Eagle Ford acreage and just over half of its Eagle Ford production on an oil equivalent basis from Q3 2025 disclosures.
- SM’s pro forma Eagle Ford position is ~40% oil, ~70% liquids, and ~45 Mboe/d after the divestiture.
- Caturus stated the deal increases its total scale to ~275,000 net acres and ~950 MMcfe/d of net production.
- On February 18, SM stock rose 7.93% versus XOP up 1.82%, an outperformance of more than 600 basis points.
